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Thought Leadership

We think a lot about risk—and ways to manage it—in a variety of ways. From rising concerns to best practices to exposure assessments, we're sure you’ll find our expert insights valuable.

Featured topic: Family Risk Management

Young man walking in city with bike | Why young adults need their own insurance | Alliant Private Client

Why young adults need their own insurance

For parents, the worrying never stops, even after their grown children leave the nest. But if that worrying leads to you to keeping those newly independent adults on your insurance program, unfortunately, they will not be properly protected. It is in everybody’s best interest that children secure their own policies once they are living independently. Please do not fret if you are still insuring your children post-college; you are not alone. It is a long-held belief that parents should be responsible for covering their young adults. But it is a belief we work diligently to correct, even as we know that emotional and financial ties can remain quite strong well into adulthood. Because that powerful connection — which recent studies suggest is stronger than ever between parents and grown children — will be much better served by separating insurance policies. This action better protects your family’s assets, and thus the legacy you are building and will eventually leave to your children. It also assures that your child has protection should unforeseen scenarios in liability or auto incidents occur. Convinced? Here’s how to help your grown children make the transition to their own insurance. When should young adults transition to their own insurance? Children need their own policies as soon as they begin to live independently. We understand that “independence” can be a somewhat gray concept, clouded by ongoing familial financial support, additional schooling, and the like. That said, we believe it’s best to err on the side of too soon because you don’t want to wait until it’s too late. Once a child has graduated from school and moved to a permanent address that is not their parents’ they can no longer be considered a dependent. This is true whether they are working, part-time or full-time, or working and attending graduate school. Only if they go straight to graduate school, living in your house during breaks, might they still be covered by their parents’ policies. Even in that case, though, it’s best to confirm their eligibility with your insurance advisor. Why individual insurance is crucial for young adults. Ours is a litigious society, with too many people looking for reasons to sue anyone with means — or anyone who has parents with means. So, your child should have their own liability coverage when they are no longer protected by yours. Liability suits are complicated and potentially costly, whether the case has merit or not. Even if a suit has no cause, and assuming the claim falls within the boundaries afforded by your policy, your child will need legal representation to argue for it to be dismissed. The policies we recommend pay those fees. Similarly, they will redress damages should your child be found negligent. This will be useful to them regardless of how much — or how little — they earn. In fact, though it may seem reasonable to conclude that young adults with no significant assets can do without a holistic insurance program, that is not a prudent calculation. In some cases, judgements can be made that one cannot immediately pay placing wages and other assets at risk. Keep in mind that we are talking about a time of life that is full of unique exposures. Simply put, young adults are most likely to find themselves in risky situations. To take just one example, they are more likely to fall prey to cyber scams because they spend so much time online or on social media platforms. How to equip your young adult with the right insurance.       1. Renters or homeowner’s insurance Of course, if your child has purchased the home they are inhabiting — or you have purchased it for them — they will have to get homeowner’s insurance. Renting may seem a less straightforward proposition, but it’s quite simple: Regardless of the cost or contents of their residence, a renter’s insurance policy is critical because it provides access to personal liability coverage. Think of it not to replace a roomful of furniture, but rather coverage that will protect you and your assets if you’re held responsible for another person’s injuries or damage to their personal property. Young renters should also be aware that everyone sharing an apartment must carry their own policy. Coverage extends only to relatives. (Note: cohabiting partners are not family in the eyes of carriers until they are married.)      2. Automobile coverage The tendency to keep children on the family automobile policy is a problematic one, as coverage extends to them only when they are driving a family vehicle. If you have bought or gifted a car to your child, it is best to retitle it in their name and have them purchase their own policy to limit your exposure should your child get sued after an accident. For young adults who don't own or regularly use a car, we recommend a non-owned auto policy, which provides coverage for when they drive a friend’s car or are hit by a car as a pedestrian.      3. Umbrella policy This additional layer of liability above the renter’s (or home) and auto coverage ensures that your child will be properly protected against lawsuits of all kinds. We recommend a minimum of $1 million regardless of their current total assets.      4. Valuables / Collectible policy Does your child own an expensive watch or piece of jewelry? Whether they bought it themselves, received it as a gift, or have been passed it, like a family heirloom, a lost or stolen piece will not be covered once they move out of your house. Therefore, your child should procure a collections policy to properly cover these items. Just as the separation of parent and child is a healthy inevitability, the separation of their insurance policies is a financial necessity. If you are wondering about how best to approach this important transferal of responsibility, or more generally, to educate your children about risk management, your account executive is ready with the next steps. And if your newly independent child needs help securing coverage, we are here for them too. ...

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It’s never too early to talk about risk with your children

Parents understand the importance of teaching their children essential life skills, from safe driving to financial literacy, but many might not think to include crucial lessons around risk management. Yes, you counsel to look both ways before crossing a street and to be wary of strangers, but how about conversations around the potential liability and repercussions with certain behaviors and actions? As risk management experts, we think a lot about how best to educate the next generation about these topics and regularly help families do just that. To encourage you to do the same, we have provided some ways to help you educate your children about risk management. Educating Tweens & Teenagers about Risk Management It is never too early to make kids aware of the fact that their actions can impact the entire family—both your assets and reputation. But this age range is when their choices begin to matter. To that end, you want children this age to: Understand the perils of social media The majority of American children are already carrying smartphones by the time they are 11, and kids even younger use social media. New phone or new account, this access is best ushered in with a conversation about the consequences of posting something defamatory or bullying by text. Helping your kids understand that nothing they put or send online is private, and that unfortunately, you can be held responsible for all of it. (This article details why it’s important for the whole family to be careful with social media.) Avoid throwing out-of-control parties When kids hold parties while parents are away, they most likely don’t know that their parents could still be held responsible if something goes awry. That’s why it’s important to tell your children about “social host laws,” which hold the entire family responsible for incidents involving drugs and alcohol at their home, even if the parents were unaware. We also recommend you warn children against drinking games because if someone gets injured or dies from alcohol poisoning, a court could find they encouraged risky behaviors. (Here are some suggestions on how to mitigate the risks of teen drinking.) Practice defensive driving The day your child gets their learner’s permit is the day you should start accentuating the perils of driving, and, in particular, driving while under the influence. But you also need to teach them how to act in the event of an accident, even a minor one. For example, even a casual “sorry” could be seen as an acknowledgment of fault, or an admission like, “I wasn’t paying attention.” (See this article for more tips post-accident.) Educating College Students about Risk Management They may still be in school, but your child is technically no longer a minor. And that means their actions can have more significant consequences. As such, your college-aged child needs to: Understand that they are now more responsible for their actions Up until now, you have likely had ultimate responsibility in most situations but now is when you can help with the transition. For example, educating your children to report any broken items in their “new” residence in a timely manner will minimize their risk of having to pay for any of these damages. Remind them that though the car they are driving is registered in your name, they still will be implicated if anything goes wrong while they are behind the wheel. And alert them to the aforementioned risks of hosting a party, particularly those connected with underage drinking. Understand that their family may still be liable for what they do Though your college student may be away from home, as long as they remain your dependent you remain accountable for their actions. This liability extends beyond the obligations that come with signing or co-signing a lease. (In fact, parents might be liable even if it is only the child’s name on the lease, should a court determine them to be in your custody.) Parents have also been held responsible for their children’s involvement in harmful, or hazing incidents. Be especially careful when studying abroad For many students, a semester abroad is a rite of passage. To help ensure it is a wonderful experience, we recommend making a copy of all important documents to ease replacement in the event they are lost or stolen and providing your child with a list of local contacts—family as well as school administrators—who can act as local advocates in the event of an emergency. Also, it’s worth reminding them to always follow local protocols and laws. Your children are fortunate to have parents who are concerned about their ongoing welfare and willing to be engaged in helping them navigate risks. As they say, it takes a village, so as always, we are available to assist in this education process at any stage of your child’s life. ...

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Why fighting cybercrime is a family affair

Gather the family: It’s time to chat about cybersecurity.Today’s cyber risks are all too common and unfortunately, constantly morphing. From attacks and extortion to bullying and more, your family and property are likely at risk if you are on the internet. Last year, the FBI’s Internet Crime Complaint Center received a total of 301,580 complaints with reported losses exceeding $1.4 Billion. The biggest group of victims was people over 60 (49,523 of them lost $342 million), but more than 9,000 cybercrimes were reported with victims under the age of 20. So whether it’s your parents or your teenager, it takes the whole family to keep cybercriminals away. Those with substantial wealth and any degree of public prominence are generally the most attractive targets for the latest crop of techno-crooks. As such, personal cyber security policies are now as essential as home or automobile insurance. That’s why we urge clients to speak with us about resources for prevention, education and protection. But in case the gang is coming over for Sunday dinner, and you want to have this discussion sooner rather than later, these are the key areas to cover over the cornbread. Beware of (false) requests One of the fastest growing cybercrimes is called “social engineering” where crooks convince you to send them money by pretending to be someone you know. Often, they break into your email system to gather tidbits of personal information to make their appeals seem believable. Create a universally understood protocol before anyone in the family approves a money transfer, and make sure it involves face-to-face or voice verification. Don’t rely on email. Criminals can program automated responses from a hacked email account that seem realistic. Put an extra wall around your money Use unique passwords for each of your banks, investment companies and/or any account that could lead to a substantial loss. Similarly, consider using a separate email account just for communicating with your bank. Avoid conducting financial transactions on public Wi-Fi networks—while it’s getting harder to hack into data moving over Wi-Fi, it’s not impossible. Banking on your phone connected to cellular data is somewhat more secure. If anyone in your family is into Bitcoin or other crypto-currencies, they need to take extra security precautions. These systems turn money into unique code numbers and if they are stolen or lost, you can’t get them back. These losses are shockingly common. Use new ways to protect your passwords Lots of money is stolen by crooks who fool people into revealing their passwords. Remind family members to watch out for phishing emails from a “bank” or other site requesting information. Even better, make sure to enable the service that require you to log in both with your password and a code sent to your cell phone. Make your passwords really long. Never mind the old advice to make funny looking pA$$w0rdz with symbols and numbers. Many crooks use computers to guess all the possible passwords until one works. Foil this scheme by using a phrase of five or six words that you can remember. Normal spelling is fine. Use software that assigns a different password to each site you use, such as 1Password and Dashlane. That way if someone steals one password, they can’t get into any of your other accounts. Talk to your kids about their social interactions (and listen too) Watch for secret “ghost” apps that hide photos or videos in a calculator or enable private messaging. Listen carefully to your kids who are likely ahead of the trends! They may hear about other kinds of scams and technology problems that the whole family should be aware of. Today’s best policies assist with data restoration, credit monitoring and damages related to cyber bullying. Because cyber scams are evolving as fast as our devices (or faster!), it’s worth staying in regular touch with your Alliant Private Client account executive. Fortunately, the insurance industry is evolving right along with the criminals so those discussions will help to ensure your coverage is up to date. ...

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Why both spouses need to be acquainted with the family insurance

Through decades of working with couples, we have found that policy onboarding and coverage decision making often falls predominantly to one spouse. This is generally a fine approach. However, our experience has also shown that it is extremely important for the other spouse to have at least some knowledge of what is and is not protected by those policies. Here are several reasons why: Your spouse brings a different set of facts to the family’s risk management. Many couples find life to be smoother when familial responsibilities are divvied up, but consider the family in which one spouse buys all the art while the other deals with the insurance. It’s not hard to imagine that some important coverage considerations could be missed, such as pieces not being scheduled and transit or restoration issues not being included. A lack of knowledge often leads to frustration in the claims process. Spouses who have not been involved in insurance conversations are likely to make assumptions about how coverage applies and even what is and isn’t covered. Many people, for example, think a flood policy covers water damage from any cause when, in fact, it pertains only to damage perpetrated by rising surface waters. Insurance advisors clarify such information during onboarding and review periods—but only to those privy to such discussions. Those who are not may well be confused and upset when a loss occurs. Things slip through the cracks. This issue most often arises around the holidays, when one spouse is not aware that an insurance advisor needs to know about big gifts like jewelry, watches and artwork. But it is a problem we see year-round, such as when a spouse does not know that a newly acquired $50,000 bottle of burgundy won’t be fully insured by the family’s $25,000 wine coverage limit. An uninformed spouse can put coverage in jeopardy. In today’s tough market, many insurance carriers are not looking to renew policyholders that have repetitive claims or whose risk exposures become increasingly hazardous. Uninformed spouses, then, can unknowingly do something that jeopardizes ongoing coverage. For example, maybe they say something at the scene of an accident or they call a carrier directly when reporting a claim which is then negatively misinterpreted impacting both the claim and future of the family policy. Knowledge matters in the event of death or divorce. The less-involved spouse needs to have their own familiarity about what is and isn’t covered, who to contact, and how to handle future matters because their spouse may not be there to depend on. Here is how we suggest you bring your spouse up to speed, quickly and easily. Set up a call with your insurance advisor specifically for this purpose. Rather than the primary insurance handler acting as a messenger or go-between, we strongly encourage clients to get their insurance professional to lead this conversation. That will ensure all information is up-to-date and accurate. Let your advisor know the purpose of the conversation in advance so they know to be detailed and comprehensive. In fact, the conversation might actually begin to pay dividends immediately, as the newly looped-in spouse often raises concerns or risks the other had not previously addressed. Establish a secure place to keep all relevant information. This can be a physical or virtual space as long as it is one you and your spouse can each find, including essential contact information and paperwork for policies and past claims. Discuss what to do before a loss. Perhaps most importantly, your spouse needs to be taught what to do—and not do—during a crisis. Again, you do not want them to call the carrier directly, as an error in communication could result in a denial. Instead, make sure they contact your account executive or the 24/7 claims team, so these professionals can best represent your case to the carrier. We understand how complicated day-to-day family life can be. But we promise that a brief conversation with us and your spouse about the family insurance portfolio today can eliminate avoidable problems down the line. Please don’t hesitate to reach out to set up a conversation with both of you about your coverage. ...

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Six key insurance topics to discuss with family members

“What do you mean it’s not covered? I know Pat bought insurance.” Unfortunately, we hear this too often. Clients call us, surprised to learn that policies purchased by other family members are not what they thought. It is easy to see how this can happen. Most busy households divide tasks among the members, and somebody typically winds up with the responsibility of arranging for insurance. But before any policy is finalized, partners and other family members need to understand what will and won’t be covered. It is one of several short but important conversations the family—adults, for sure, but sometimes younger ones as well—should have about insurance. Here is a quick guide to the topics that merit some proactive discussion—and who to have that conversation with: Topic: What is-and isn't-coveredDiscussion participant: Spouse Sometimes the spouse who isn’t doing the research gets surprised at the cost of a policy. To be fair, buying insurance always entails navigating a trade-off: lower premiums or broader coverage. For instance, coverage meant for more affluent families can have higher liability limits and fewer exclusions than mass-market policies, and protection for certain major risks—especially earthquakes and floods—requires additional coverage that can be quite expensive. It’s critical for both partners to agree on what risk the family is willing to accept and what protection it wants to pay for now. Topic: Which possessions hold the most valueDiscussion participant: Spouse Most homeowners policies have limits to how much they will reimburse for high-valued specialty items like jewelry, fine art, and collectibles. You can purchase coverage separately to insure those specific items or collections to their full value. Sometimes one partner’s personal possessions—that 1930 Charlotte Clark Mickey Mouse doll, for example, or the 1952 Topps Mickey Mantle baseball card—are worth far more than their uninformed spouse might suspect. Before any new policy is finalized, a brief chat could be helpful to ensure that. Topic: Who to call when something happensDiscussion participant: All of-age family members Everybody needs to know that when there is an accident, theft, or other potential claim to be made, the first call should be to your insurance broker not the insurance carrier. That is because brokers can advise you on how best to present your claim, thus avoiding expensive misunderstandings. If for example, your basement floods due to your sump pump failing from a power outage during a storm. You might be inclined to report a flood to your insurance carrier. But, that characterization would be inaccurate and mostly likely lead to a denied claim. In fact, the actual cause of damage was the failure of the sump pump to operate, because of a power loss, which can be covered depending on the type of policy you purchased. So put your broker's name and number in every family member’s cell phone. Topic: Where the insurance information isDiscussion participant: All of-age family members Quick, does everyone know where the insurance cards and policy documents are? If they don’t, they should. Technology can help here. Consider making a password secured folder in Google Drive or iCloud to store electronic copies of all the necessary information. Most insurance carriers these days also have apps for this purpose alone. In many states, these apps are a legal substitute for your paper auto insurance card. Topic: The consequences of an insurance claimDiscussion participant: New drivers Add one more “talk” to the list of uncomfortable sit-downs to have with your maturing kids. This one is to explain how car insurance—and liability laws—work. The most important idea to impart is this: insurance doesn’t eliminate all consequences of reckless driving and the overall impact for even just a speeding ticket or moving violation can be severe. If they are involved in accident, there is almost always a deductible applied and in many cases, this can result in a premium increase. Depending on the severity and/or frequency of these incidents, the auto policy could be non-renewed by the insurance carrier. Finding replacement coverage could be very expensive, and your ability to secure high limits of liability protection could be compromised. Your teenagers also need to know that if they do get in an accident, they shouldn’t say anything that might indicate fault. It’s natural for anyone, especially a new driver, to apologize. Unfortunately, even a brief “I’m sorry” can turn into a major liability once the lawyers get involved. Tell your kids to be polite, and to ask if anyone needs medical help, but not to discuss anything specific about the incident. If you need some additional talking tips, this might be worth the short read. Topic: Helping your elderly parents with their insuranceDiscussion participant: Your parents If you are helping your parents with some of their daily living tasks—say shopping, or paying their bills—it is also time to keep an eye on their insurance. To start, that means tracking down the policies they have, the insurance broker they use, and where they keep their documents. Then, ask them to call their broker to authorize you to receive information about their policies. Without that authorization, privacy rules may make it harder for you to help them with billing or claims issues if they arise. Carving out time for such discussions is well worth the time and effort—as with any risk management program, an ounce of prevention goes a long way. Of course, should you need any assistance, either before or after these, we are available to consult. ...

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Long term care: an important piece of family risk management

Ten thousand Americans turn 65 every day and many more of them will live into their 80s and beyond. Many will require daily assistance as they age, the cost of which can quickly drain resources that most people expect to both last their lifetime and include a healthy estate for heirs. Thus was born long-term care insurance. After witnessing clients struggle with the challenges of coping with their own aging or that of their parents, we’ve come to see long term care as an important part of family risk management. Today, however, the market for long term care insurance is changing due to the rise in care costs and significant claims over the past several years. The results have limited the various carriers clients can work with and have caused premiums to rise—a trend we expect to continue for the foreseeable future. Despite the challenging market, the reasons to insure go beyond the desire to minimize financial risk and protect assets and legacy. Long term care insurance means not being dependent on the financial calculations of others when you’re most vulnerable. Therefore, we want to share our current thinking about long term care coverage, the various benefits of adding it to your program, and more. Let’s first answer some important questions. What sort of “care” are we talking about? The U.S. government defines long term care as a “range of services and supports you may need to meet your personal care needs.” It’s typically not medical care, but rather assistance with everyday tasks like bathing, dressing, using the bathroom, moving around, eating or taking medications. Professional service providers in this realm may include in-home nurses and aides, adult day programs or long term care facilities. Who ends up needing such care? People who live alone are the likeliest candidates, increasingly as they age. With some couples, older women are more likely to need long term care, since they outlive their husbands by an average of about five years. Other likely candidates: people with disabilities, chronic conditions, and poor diet or exercise habits. Am I (or a loved one) a candidate? Quite possibly. Seventy percent of those turning 65 today will ultimately need long term care—and 20% will need it for longer than five years. Industry projections suggest that cost increases will continue to outpace inflation over the next two decades; facility care may cost as much as $400,000 per year by 2040. That is a sizable amount of money and unfortunately, Medicare does not cover long term care. If long term care insurance—or the benefits it brings—seems like something that’s right for you or your family, you’ll need to talk with an insurance broker to understand the full range of options. We have seen some clients purchase policies for aging parents so it can minimize potential conflicts between siblings over their care. To give you some additional background, we will discuss a few ways to look at long term care below. Note that the benefit can be spent on whatever care is preferred (at home, in a nursing or assisted-living facility) or on care coordination. Traditional long term care insurance Only a few companies still offer traditional policies. With those policies, premiums are paid for life, but not at a guaranteed rate. (As many of our clients know, rates have been raised quickly and steeply in recent years.) Benefits are generally limited to $10,000 a month for up to five years. Keep in mind this can be a use-it-or-lose-it coverage—generally not always the best available option on the market. Hybrid life/long term care programs Upside: you or a loved one will ultimately see a return from the investment because there is a death benefit usually equal to the amount paid in premiums. Also, premiums are guaranteed and inflation-protection options are available. However, the downside: there are often limitations on the monthly amounts and number of years the policy will pay out. Permanent life insurance Since most long term care claims (unfortunately) end in someone’s passing, this workaround essentially allows people to reimburse either their family members or estate for associated costs. Self-insurance This involves setting aside money to invest, solely for long-term care. Often long term care programs can provide competitive returns if leveraged correctly. Upside: No premiums, and if the funds aren’t used they become part of the “insured” person’s estate. Downside: Investment gains may be taxed. As insurance professionals, it is our responsibility to highlight and help our clients eliminate risks around some of the most challenging or sensitive topics. We are here to help guide you on the options best suited for you and your family. ...

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